Sunday, July 26, 2015

Global Derivatives: $1.5 Quadrillion Time Bomb

When investing becomes gambling, bad endings follow. The next
credit crunch could make 2008-09 look mild by comparison. Bank of
International Settlements(BIS) data show around $700 trillion in global
derivatives.

Along with credit default swaps and other exotic instruments, the
total notional derivatives value is about $1.5 quadrillion – about 20%
more than in 2008, beyond what anyone can conceive, let alone control if
unexpected turmoil strikes.

The late Bob Chapman predicted
it. So does Paul Craig Roberts. It could “destroy Western civilization,”
he believes. Financial deregulation turned Wall Street into a casino
with no rules except unrestrained making money. Catastrophic failure
awaits. It’s just a matter of time.

Ellen Brown calls the
“derivatives casino…a last-ditch attempt to prop up a private pyramid
scheme” – slowly crumbling under its own weight.

For years, Warren Buffett called derivatives “financial time bombs” – for economies and ordinary people.

Unless collateralized or guaranteed, their worth depends on the
creditworthiness of counter-parties. Earnings on derivatives are “wildly
overstated,” Buffett explains – because they’re “based on estimates
whose inaccuracy may not be exposed for many years.”

When corporate bosses ask financial executives how profits look in
any quarter, they, in turn, ask how much do you want, then manipulate
things to oblige when told.

Since 2008, too-big-to-fail banks consolidated to much greater size
than ever. They’re financial and political powerhouses controlling world
economies to their own advantage.

Civilization’s only hope is smashing them – dismantling them into
small, impotent pieces, or ideally putting money back in public hands
where it belongs.

It’s too important to be privately controlled. Financial predators
entrap small/weak nations into unrepayable debt peonage like Greece,
bleed them dry, and thirdworldize developed ones into dystopian
backwaters – while they grow richer and more powerful than ever ahead of
the whole corrupt system going bust, decimating billions worldwide in
greater human misery than already.

Washington Post editors support what demands condemnation. Don’t worry, be happy, they say. On July 23, they headlined “The Fed’s stance on banks and capital makes good sense.”

Half-intelligent economics students know better. The Wall Street
owned, controlled and operated Fed is the problem, not the solution.
Monied interests buy politicians like toothpaste. They write business
friendly legislation, getting Congress to pass it in return for generous
campaign contributions and other special favors.

America’s economy and financial system are house-of-cards disasters waiting to happen. Not according to WaPo editors.

“(T)he US financial system has made significant progress toward being
less bailout-prone since” the dust settled on the 2008-09 crisis, they
said.

The source: The Wall Street
controlled Fed’s last ‘stress test’ assessment made public in March –
ignoring the monstrous derivatives ticking time bomb weighing them all
down along with the entire financial system.